Commonwealth Bank of Australia plans a concerted push into the general
insurance market as its seeks to draw a more significant contribution from the
smallest and most volatile earner in the group its insurance division.
Peter Beck, managing director of CBA's life and general insurance division,
CommInsure, said yesterday the group planned to double market share in home and
contents policies, a market dominated by the likes of NRMA Insurance, to 10 per
cent in the next three years.
While the division might look at acquisitions, growth would primarily come
from organic opportunities such as selling more policies to customers who take
out mortgages with CBA.
Mr Beck said the bank might even look at controversial classes of insurance
such as public liability, one of the least profitable for insurance companies,
if the market was reformed and was attractive.
At present, the cross-sell ratio for home and contents policies was about 40
per cent but he said the bank could do much more to encourage its lending staff
to sell insurance products to customers. ``We have basically got access to 10
million customers and our mission is to cross-sell insurance to those 10 million
customers," he said.
Some branches for instance cross-sold insurance to 80 per cent of customers
but the experience was variable and others sold none.
Mr Beck said it was also the objective of the bank to become No1 in life
insurance in Australia. It is now second, behind AXA Asia Pacific.
CBA generates about $450 million in life insurance premiums, mainly from
businesses inherited from the Colonial acquisition, about $150 million in home
and contents premiums and a similar amount in car insurance through rebadged
policies underwritten by Allianz.
But the business's success has been overshadowed by weak results from the
Asian life insurance division, where CBA has resisted calls for it to be sold,
and the success of the bank's fund management division, Colonial First State.
``The nature of our business is that people tend to think it's volatile but
with life insurance the more people we cover the less volatile it is," Mr Beck
Legacy system issues associated with Colonial's previous life acquisitions of
Legal & General and Prudential had been of concern to the market immediately
after the purchase of Colonial but he said IT issues had been resolved.
CBA could also better exploit opportunities to sell life products through its
tied financial planners and was planning to launch a new income protection
product that would offer discounts on certain claims criteria. The bank is
expected next year to phase out the Colonial name for its life insurance
products and replace it with the CommInsure name.